Bulgaria to take first steps towards euro

Bulgaria will take the first steps towards joining the euro before the summer, its finance minister said on Thursday (11 January).

Vladislav Goranov told a group of journalists in Sofia that Bulgaria will "most likely apply in the first semester" to the EU Exchange Rate Mechanism (ERM II), the mandatory phase before effectively adopting the EU single currency.

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Prime minister Borisov is hoping his country will apply to join the European Exchange Rate Mechanism before the summer (Photo: Wikipedia)

Goranov said Bulgaria had been "holding intensive discussions" with the European Central Bank (ECB) and eurozone member states about the move and that it was "ready".

The Bulgarian government will wait for a "signal" from the ECB and other EU actors that its application would have some chances to be accepted.

But Goranov added that the government would apply even if that sign doesn't come.

"We need a certain direction on what we need to do to join this [euro] club," he said.

"We don't think there are any sufficent arguments for us to stay out," the minister insisted, adding that his country fulfils the criteria to join the euro.

Bulgaria, the fourth most-rapidly growing EU economy, registers a zero percent deficit and public debt below 30 percent - against an EU average of almost 90 percent.

"We are excellent pupils," Goranov said.

Goodbye to the lev?

Bulgaria joined the EU in 2007, but its currency, the lev, has been pegged to the euro since 1997.

Because of that, Goranov pointed out, Bulgaria is already "highly dependent on ECB policy" and cannot devaluate its currency.

The minister insisted that Bulgaria joining ERM II "will not result in any additional risk for the euro system."

The push towards the euro comes as Bulgaria takes over the six-month presidency of the EU council.

The country is also facing resistance from some other member states to it joining the passport-free Schengen area.

"We would not like to witness the same situation as with Schengen, where all formal criteria have been met but we are not allowed to any additional instruments for [EU] integration," the minister warned.

Countries like Germany are said to be wary of letting Bulgaria join the euro in the coming years. But Goranov argued that an application to the ERM II would oblige EU institutions to set clear targets and for Bulgaria to respect them.

"We accept all criticism and arguments as far as they are honest," he said.

"We need a perspective," he said, insisting that it would be "very difficult to explain to [the Bulgarian] society why we do not file a formal application."

Bulgaria is starting its six-month EU presidency amid attempts to shake off issues of corruption and poor press freedoms. Earlier this week, Bulgaria's president vetoed an anti-graft bill, claiming it was too weak.

Cyprus has applied to join the eurozone on 1 January 2008, as part of a trend that is seeing the EU's smallest new members rush to get into the single currency while bigger economies such as Poland and Romania pull further away from the euro-horizon.

A dispute between the government and the president over an anti-corruption law has put the spotlight on one of the Bulgaria's main problems - just as it is trying to showcase its economic and social progress.